Kuala Lumpur: Sabah has been deprived of an estimated RM120 billion in federal revenue since 2021, claims Keningau MP Datuk Seri Dr Jeffrey Kitingan.
Speaking during the Budget 2027 debate in the Dewan Rakyat, Jeffrey said the figure represented approximately RM20b annually that he believed Sabah should have received under its constitutional entitlement to 40 per cent of federal revenue derived from the state.
He claimed the Federal Government collected at least RM50b annually from Sabah, based on figures dating back to 2021.
“Every year, we lose RM20b. From 2021 to 2026, that is six years, means RM120b has been denied to Sabah,” he said. The RM120b figure is Jeffrey’s own estimate and has not been independently verified.
Under the Federal Constitution, Sabah’s entitlement is calculated based on the increase in net federal revenue derived from the state over a 1963 baseline, rather than simply 40pc of total annual collections.
Jeffrey questioned why the amount remained unresolved when the revenue originated from Sabah.
“There is no reason why the 40%pc cannot be paid. The money is there and it comes from Sabah,” he said.
He blamed Sabah’s persistent poverty and underdevelopment partly on the failure to fully implement the Malaysia Agreement 1963 (MA63) stipulations, particularly the state’s constitutional financial rights.
“Failure to respect constitutional rights is a failure to implement MA63. This failure has resulted in Sabah’s underdevelopment and poverty.
“It has also turned Sabah into a beggar, overly dependent on Kuala Lumpur for everything, including finances, social development and politics.”Jeffrey referred to the Kota Kinabalu High Court’s Oct 17, 2025 ruling, which ordered the Federal and Sabah governments to review the state’s entitlement for the period from 1974 to 2021 and reach an agreement on the amount payable.
However, the Court of Appeal granted a stay of the implementation orders in April this year pending the Federal Government’s appeal, scheduled to be heard on Oct. 29.
The Federal Government has maintained that its appeal does not challenge Sabah’s constitutional entitlement, but concerns the interpretation of constitutional provisions and certain findings of the High Court.
Jeffrey said an independent assessor could be appointed under the constitutional framework if both governments could not agree on the calculations, rather than continuing prolonged negotiations.
He also criticised interim special grants as inadequate substitutes for the entitlement and renewed his proposal for an artificial intelligence-powered Malaysia Agreement Revenue Tracking System (MARTS) to monitor federal revenue collected from Sabah.
Turning to Budget 2027, Jeffrey said the RM18.7bil announced for Sabah had initially raised hopes of a major increase in development spending.
However, the figure also included federal operating expenditure, civil servants’ salaries and other federal obligations.
“We were surprised when the Prime Minister announced RM18.7b. We thought, this time, it was a windfall.
“But after examining it, it was our hopes that came crashing down,” he said.
According to Jeffrey, Sabah’s actual development allocation was RM7bil, compared with RM6.2bil for Sarawak.
He claimed about 85pc of development funding continued to favour Peninsular Malaysia, despite Sabah and Sarawak’s greater infrastructure needs.
Jeffrey proposed a new formula allocating 50pc of federal development funds to Peninsular Malaysia and 25pc each to Sabah and Sarawak.
“Give us a new formula. At least, 50pc for the peninsula, 25pc for Sarawak and 25pc for Sabah.
“This is fairer than what we are getting now, where Sabah and Sarawak combined receive, at most, only 15pc,” he said.
He argued that the distribution should reflect Sabah and Sarawak’s position as founding partners in Malaysia rather than treating them merely as two among 14 states.
Jeffrey also proposed channelling 75pc of the RM2.3b allocation for rural roads and RM3.3b for basic rural infrastructure to Sabah and Sarawak.
He said the two states needed greater funding because of their vast territories, scattered settlements and the higher cost of providing roads, electricity and clean water in remote areas.
“Can 75pc of these allocations be spent in Sabah and Sarawak?” he asked, pointing out that many rural roads remained unpaved while some communities still lacked basic utilities.
Jeffrey also challenged the constitutionality of the Petroleum Development Act 1974, arguing that ownership of oil and gas resources remain under state jurisdiction.
He said Sabah previously received a 12.5pc oil royalty before the petroleum agreement signed with Petronas on June 14, 1976, resulted in the state receiving only 5pc payment.
“The Federal Government’s role is to develop these resources, not to take over ownership of oil and gas,” he said, and called for ownership rights to be restored to Sabah and Sarawak.
Jeffrey also requested additional housing assistance for hardcore-poor households in Sabah’s interior, particularly Keningau and Tenom.
He sought RM7m to upgrade Taman Tukad Sinurambi in Tambunan into an ecotourism and agrotourism attraction, including 3,000 steps leading to the hilltop, agricultural showcase areas and a cultural centre.
Jeffrey further urged the government to consider the additional travel and accommodation expenses incurred by Sabah and Sarawak MPs attending parliamentary sittings in Kuala Lumpur.
